Watchdog forces GM to open books

CAR giant General Motors has hit another roadblock in a disastrous year, with US regulators demanding answers from the firm as part of its accounting practices probe.

GM admitted the Securities and Exchange Commission has ordered it to supply information about its financial reporting for pensions and on transactions between the firm and failed car parts supplier Delphi.

As Delphi's former parent, GM may be liable for up to $12bn(£6.8bn) in benefits at Delphi because of guarantees it offered when it spun off the parts arm in 1999. Delphi filed the largest bankruptcy in US automotive history this month.

The struggling carmaker is axeing at least 25,000 manufacturing jobs. GM is haemorrhaging cash in its core North American market and struggling in Europe.

Globally, the company has lost about $3.8bn so far this year. Losses at its UK unit, Vauxhall, spiralled last year from £115m to £178m for the third year running, despite attempts to cut costs and return the business to profit.

Vauxhall employs 4500 staff at its Ellesmere Port plant making Astras and Vectras, although those jobs appear safe for now.

GM is in the worst financial state it has been in since narrowly avoiding bankruptcy 13 years ago.

The SEC is also probing GM over its recovery of various costs from suppliers and supplier price credits, the company said in a statement.

The SEC and federal grand jury subpoenas had also been served on entities linked to its finance arm, General Motors Acceptance Corp, in connection with insurance industry probes into products that may help companies smooth earnings.

The investigation will force GM to shelve plans, announced last week, to sell its majority stake in GMAC in a bid to shore up the finance arm's credit rating - slashed to junk status along with GM's own rating earlier this year.

GMAC's massive borrowing costs have soared thanks to the downgrade, threatening its ability to support GM's lending and finance operations. GM said the group was cooperating with the investigations.

German- US group Daimler-Chrysler, which bucked the trend of GM and Ford in this week recording a $910m (£514.1m) profit for the third quarter, has also received an SEC subpoena for information as part the investigation into pension accounting practices at GM.